When I learned that Google was rushing in late in the process to demandÃ‚ a net neutrality amendment on theÃ‚ Michigan franchise reform legislation, the image that came to mind was that of a spoiled child seeing people building a sandcastle on the beach and running through the sand castle cackling with glee at the attention they could get from destroying others hard work.

I continue to marvel at the undisciplinedÃ‚ naivete and brat-ishnessÃ‚ of this $150 billion 8 year old company called Google. Like a spolied child that has gotten used to getting everything they scream forÃ‚ because of over-indulgent market parents who never said no, this company truly behaves like they think the world revolves around them and their demands.

Barry Diller, the headÃ‚ of IAC, has shrewdly collected many popular Internet sites, like Ticketmaster, Citysearch, HSN (Home Shopping Network) LendingTree.com, Evite, and Match.com, and ihas said publicly that they will more tightly integrating these popular sitesÃ‚ with Ask.com's search engine. This is a classic gatekeeper model, whichÃ‚ creates value by skewing search results to their home-owned sites. Now this is also called vertical integration, which is legal and has many benefits for consumers. To be clear, I believe vertical integration like this is just fine.

Like a mugger whoÃ‚ cries foulÃ‚ whenÃ‚ his victim manages to wriggle free fromÃ‚ their well-planned ambush and pummeling, net neutrality proponents are now crying foul thatÃ‚ Chairman Martin is excercising his legal authority to engageÃ‚ Commissioner McDowell to vote to break the 2-2 impasse and vote on either approving or disapproving the AT&T-Bell South merger.Ã‚

Can you believe the unmitigated gall of net neutrality proponentsÃ‚ playing the "victim" when they were really the muggerÃ‚ here? I guess we should not be surprisedÃ‚ then when theseÃ‚ same folks impugn the integrity andÃ‚ ethicsÃ‚ ofÃ‚ public servants whoÃ‚ have assiduously followed the legal, procedural, and political processes.Ã‚ Any fair-minded person should be disturbed at the "ends justify the means"Ã‚ tactics of many net neutrality proponents in this proceeding.Ã‚ Ã‚ Ã‚

(Translation: Microsoft wantsÃ‚ competitorsÃ‚ to "play in their sandbox" so Microsoft and their preffered partners can watch them and get discriminatory preference inÃ‚ commercially exploitingÃ‚ others' resultingÃ‚ innovations.)

Has anyoneÃ‚ at Microsoft thought this through? As IÃ‚ explained in my recent open letter to Bill Gates and Steve Ballmer,Ã‚ Microsoft'sÃ‚ hamhandedness in Washington has already resulted inÃ‚ MicrosoftÃ‚ being subject to the FCC's net neutrality principles and regulatory jurisdiction.Ã‚ This new endeavor is just another example in a long litany of Micosoft Internet businesses that are not neutral and discriminate for commercial gain.

How is their sandboxÃ‚ neutral? Let me quote directly from Microsoft's own press release which is pretty incriminating:Ã‚ "BT will have early exposure, visibility andÃ‚ access to the winning services including the ability to test and deploy the prototype services." Ã‚

I continue to be amused at Google's "do as I say, not do as I do" way of doing business.Ã‚ As the online champion of regulating anyÃ‚ "non-neutral" behavior by others, it is instructive to keep a close eye onÃ‚ the "non-neutral" thingsÃ‚ Google does in the market.

"Google has the potential toÃ‚ own this market...Paypal is essentially laying down and letting Google buy market share."

"In a retail sense, Google is using Checkout as a loss leader to get market share works for Google, becuase they will make it up more with advertising, which is highly profitable."

So what is the point? Google routinely uses its market leverage (or is it market power?) inÃ‚ the online ad market it dominatesÃ‚ "toÃ‚ buy share" or compete in a way that another company can't. This would be perfectly kosher, if, Google was not alsoÃ‚ the champion for making this type of typical Google market behaviorÃ‚ illegal for broadband carriers, most of whom have dramatically less broadband share than Google has in its dominant market of search.

Very interesting! Yahoo in an ex parte report by James Hedlund, Director of Yahoo! Communications Policy, after its meeting with the advisors of FCC Chairman Martin and the other commissioners, distancedÃ‚ Yahoo from the more radical stance of Google and Moveon.org's Save the Internet.Ã‚

The operative part is:

"I reiterated our support for meaningful and enforceable net neutrality protections. To beÃ‚ effective, however, they must apply to all broadband Interent Access Providers, not just AT&T.Ã‚ For this reason, Yahoo! does not seek additional Net Neutrality conditions in this proceeding beyond the committments AT&T has already made. {bold empahisis added} Yahoo! continues to support adoption of generally applicable NetÃ‚ Neutrality protections in order toÃ‚ preserve innovation, competition, and openess on the Internet."Ã‚

Yahoo! Yahoo appears to be aware that principles are principle and that mugging a merger and extorting special conditions is a bad way to make public policy. A tip of the hat to Yahoo is deserved. Consider it tipped.

Google's attempt to amend the pending franchise bill in Michigan with Net NeutralityÃ‚ looks like it will not succeed. The bill had already passed the House and the Senate Commitee unanimously approved the bill yesterday without Google's last minute net neutrality amendment.Ã‚ Google will probably try to amend it on the Senate floor, but given that it is not in the House or Senate Committee versions, their chance of success of winning an amendment is slim.

They could try and block passage and run out the clock, but I don't think Google is stupid enough to be a spoilerÃ‚ and stop 2000 more jobs for theÃ‚ job-strapped Michigan economy.

The reality is that net neutrality didn't become an issue and have any traction until pro net neutrality forces attached the issue to a moving legislative vehicle last year -- the video franchise reform bill.

EssentiallyÃ‚ the online giants and Save the InternetÃ‚ were able to play "big"Ã‚ with fewÃ‚ resources. To their credit, they were able toÃ‚ create a lot of attention and aÃ‚ whole lot of obstruction to the process. They wonÃ‚ the battle of stopping the bill, but lost the war of legislating net neturality. Ã‚

Well now the shoe is on the other foot.Ã‚ Net neutrality proponents now need to build momentum for a bill from scratch,Ã‚ because the companies that pushed it last time are not going to push it this time. They will be able to play defense, which as the net neturality proponents learned this past year, is a lot easier than legislating.

On Wednesday, it was very significant that at the Big Wall Street UBS conference hosted by John Hodulik,Ã‚ that all the Bell CFOs resetÃ‚ Wall Street expectations that they did not need any legislation of major things done inÃ‚ Washington this year. Ã‚ TheyÃ‚ also explained that since both the telecom and cable companies were united in opposition to net neutrality -- the isssue was going nowhere next Congress.

Next year we will see if there is a real there there surrounding net neutrality. Net neutrality proponents will learn for themselves how easy it is to play defense rather than offense in Washington.

It will be interesting to see if net neturality proponentsÃ‚ can turn both theirÃ‚ ragtag coalitionÃ‚ and their ratbag of unsubstantiated allegations into policy consensus and a successful legislative vehicle. It will prove hard. Real hard.

The feedback has been that it was a well written and thought provoking letter/analysis that got people and investors to think of the net neutrality issue and fight in a much broader, holistic and linked way.

Most investors had been looking at the issue in isolation or through a silo view.

Few investors had yet connected the dots in the open letter; that Microsoft is becoming more of a communcations company every day with all its regulatory risks.

Now there is a much better appreciation in both the investment and antitrust communities for what Microsoft's net neutrality position could mean for the company's web services plans and model going forward.

The letter was also an eye opener to investors that Microsoft is not really controlling its own destiny in Washington, but following Google's leadership. Google certainly appreciates the irony of an eight year old company taking the "adult" company to school in Washington.

Given that Google presents the biggest real threat to Microsoft's web services plan in both the marketplace and in Washington, I find it interesting that Microsoft has allowed itself to be so outsmarted and outflanked by Google in Washington. Is Redmond going soft or just distracted?

Ugh. Internet regulation creep continues. The Federal Trade Commission (FTC) said yesterday that companies that engage in word-of-mouth product endorsements must disclose if recommenders are being paid to recommend the product or service. The Washington Post had a good story on it today.

Since this is all about forthright disclosure, let me reiterate that I openly and regularly disclose that I represent broadband interests in the net neutrality debate. And as a strong believer in law enforcement, I have no sympathy for those engaging in deceptive or fraudulent business practices. That said, I also dread Internet regulation creep, because it will ultimately slow economic growth, job creation and innovation.